Shipping lines cut Middle East routes, posing risk to trade flows

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DUBAI – The world’s largest container carriers are rerouting ships to avoid the Persian Gulf as a widening military conflict pitting the US-Israeli alliance against Iran threatens to disrupt global merchandise trade.

MSC Mediterranean Shipping, the top container line, halted cargo bookings for the Middle East, while No. 2 A.P. Moller-Maersk and Hapag-Lloyd suspended all crossings in the Strait of Hormuz. 

DP World earlier suspended operations at the Jebel Ali port in Dubai, according to a notice sent to customers and seen by Bloomberg on March 2. The company later said all four of its terminals are operational.

Japanese shipping companies also suspended operations in the Persian Gulf. Nippon Yusen KK temporarily halted its operated vessels from travelling through the Strait of Hormuz, said a spokesperson. Kawasaki Kisen Kaisha has instructed its ships in the Persian Gulf to remain on standby, while Mitsui O.S.K. Line ordered its vessels to wait in safe waters.

The logistics disruptions come as a major blow to the region, where business hubs such as Dubai rely on trade, tourism, transport and finance, along with a reputation as a haven in a troubled neighbourhood.

Protracted snarls could reverberate across global supply chains, analysts warn.

Jebel Ali adjoins one of the world’s largest industrial parks that is a key crossroads for goods shipped from Asia to Africa, Europe and the US East Coast.

Major American and European companies have distribution, packaging and warehousing centres in the Jebel Ali Free Zone, which sprawls over nearly twice the square miles of Chicago’s O’Hare International Airport.

Dubai is also a vital centre for international air cargo. The two biggest airlines in the United Arab Emirates (UAE) have stopped flights, and airports have been damaged by debris from attacks following the conflict that started at the weekend.

The United States and Israel launched attacks on Iran on Feb 28. Iran’s retaliation has targeted countries throughout the region, including US interests in the UAE, Qatar and Bahrain. The hostilities have also slowed the movement of ships, including those carrying oil and gas, in and out of the Strait of Hormuz amid warnings to avoid the narrow waterway.

Jebel Ali, the world’s busiest container port outside Asia, had a fire at one of its berths caused by falling debris from an aerial interception, the government’s media office said on social media platform X earlier. Civil defence teams were attempting to put out the blaze, according to the post early on March 1.

The outbreak of fighting threatens to cause congestion at ports where cargo will have to be rerouted, adding strains that will underpin spot container rates, which are already rising for services needed in the conflict zone. 

Hapag-Lloyd on March 1 announced a “war risk surcharge” of US$1,500 (S$1,900) per 20-ft container for deliveries in the region, effective March 2.

Cargo owners “should prepare for a ripple effect, with rising spot rates on other major deep-sea trades as well”, Vespucci Maritime chief executive Lars Jensen wrote in a LinkedIn post. 

COSCO Shipping Holdings, the biggest Chinese carrier, said vessels that have already entered the Persian Gulf and completed operations “have been instructed to proceed to safe waters to hover or anchor”. COSCO said it is evaluating options, “including potential alternative discharge ports”.

Avoiding the Red Sea

In addition to avoiding Hormuz, Maersk said it is routing services away from the Suez Canal and sending vessels around the southern tip of Africa, after Houthi militants threatened to restart attacks on cargo ships in the Red Sea with ties to the US and Israel.

Hapag-Lloyd, the No. 5 player and Maersk’s partner in a vessel-sharing alliance, announced a similar rerouting.

France’s CMA CGM, which ranks third, told vessels in the Persian Gulf to take shelter immediately and suspended passage through the Suez. It imposed an “emergency conflict surcharge” of US$2,000 per 20-ft container for bookings in the region.

Those moves came after Maersk and other carriers, before the latest outbreak of violence, indicated that 2026 would be the year they returned fully to the Suez shortcut between Asia and Europe after mostly avoiding that route as Houthi attacks forced them to take the longer journey south of Africa since December 2023.

“The repercussions of the joint military operation by the US and Israel against Iran and subsequent retaliatory action will see the further weaponisation of trade and shatter hopes of a large-scale return of container shipping to the Red Sea in 2026,” said Mr Peter Sand, chief analyst with Xeneta, a digital freight platform based in Oslo. BLOOMBERG